Abstract
This paper examines the theoretical literature and conducts empirical analysis on the mechanisms of corporate governance. We focus on directors’ role in ameliorating various types of agency problems (e.g., corporate misconduct) arising from conflicts of interests between stakeholders and managers to the firm. In a sample of 45 public listed construction companies in Taiwan between 2005 and 2014, the result indicates that illegal corporate behavior is more likely to occur in firms with large boards while board independence isn’t significant for misconduct constraining. The finding also shows why board’s monitoring function is important and how firms rein in misconduct by altering board size and composition.
References
Bacon J (1993) Corporate boards and corporate governance. Conference Board
Barnhart SW, Marr MW, Rosenstein S (1994) Firm performance and board composition: some new evidence. Manage Decis Econ 15(4):329–340
Bathala CT, Rao RP (1995) The determinants of board composition: an agency theory perspective. Manage Decis Econ 16(1):59–69
Baysinger B, Hoskisson RE (1990) The composition of boards of directors and strategic control: effects on corporate strategy. Acad Manage Rev 15(1):72–87
Borokhovich KA, Parrino R, Trapani T (1996) Outside directors and CEO selection. J Financ Quant Anal 31(3):337–355
Boyd B (1990) Corporate linkages and organizational environment: a test of the resource dependence model. Strateg Manage J 11(6):419–430
Chaganti RS, Mahajan V, Sharma S (1985) Corporate board size, composition and corporate failures in retailing industry. J Manage Stud 22(4):400–417
Daily CM, Dalton DR (1994) Bankruptcy and corporate governance: the impact of board composition and structure. Acad Manage J 37(6):1603–1617
Daily CM, Schwenk C (1996) Chief executive officers, top management teams, and boards of directors: congruent or countervailing forces? J Manage 22(2):185–208
Dalton DR, Daily CM, Ellstrand AE, Johnson JL (1998) Meta-analytic reviews of board composition, leadership structure, and financial performance. Strateg Manage J 19(3):269–290
D’Aveni RA, Kesner IF (1993) Top managerial prestige, power and tender offer response: a study of elite social networks and target firm cooperation during takeovers. Organ Sci 4(2):123–151
Fama EF, Jensen MC (1983) Separation of ownership and control. J Law Econ 26(2):301–325
Fich EM, Shivdasani A (2006) Are busy boards effective monitors? J Finance 61(2):689–724
Friedman SD, Singh H (1989) CEO succession and stockholder reaction: the influence of organizational context and event content. Acad Manage J 32(4):718–744
Gales LM, Kesner IF (1994) An analysis of board of director size and composition in bankrupt organizations. J Bus Res 30(3):271–282
Herman ES (1981) Corporate control, corporate power, vol 98. Cambridge University Press, Cambridge, p 1
Hirshleifer D, Thakor AV (1994) Managerial performance, boards of directors and takeover bidding. J Corp Finance 1(1):63–90
Ingley C, Van Der Walt N (2005) Do board processes influence director and board performance? Statutory Perform Implications. Corp Governance Int Rev 13(5):632–653
Jensen MC (1993) The modern industrial revolution, exit, and the failure of internal control systems. J Finance 48(3):831–880
Jensen MC, Meckling WH (1976) Theory of the firm: managerial behavior, agency costs and ownership structure. J Financ Econ 3(4):305–360
Jensen M, Zajac EJ (2004) Corporate elites and corporate strategy: how demographic preferences and structural position shape the scope of the firm. Strateg Manage J 25(6):507–524
John K, Senbet LW (1998) Corporate governance and board effectiveness. J Bank Finance 22(4):371–403
Johnson JL, Daily CM, Ellstrand AE (1996) Boards of directors: a review and research agenda. J Manage 22(3):409–438
Kesner IF, Johnson RB (1990) An investigation of the relationship between board composition and stockholder suits. Strateg Manage J 11(4):327–336
Kiel GC, Nicholson GJ (2003) Board composition and corporate performance: how the Australian experience informs contrasting theories of corporate governance. Corp Governance Int Rev 11(3):189–205
Le Y, Shan M, Chan AP, Hu Y (2014) Overview of corruption research in construction. J Manage Eng 30(4):02514001
Mallette P, Fowler KL (1992) Effects of board composition and stock ownership on the adoption of “poison pills”. Acad Manage J 35(5):1010–1035
Mizruchi MS (1983) Who controls whom? An examination of the relation between management and boards of directors in large American corporations. Acad Manage Rev 8(3):426–435
Pearce JA, Zahra SA (1991) The relative power of CEOs and boards of directors: associations with corporate performance. Strateg Manage J 12(2):135–153
Pearce JA, Zahra SA (1992) Board composition from a strategic contingency perspective. J Manage Stud 29(4):411–438
Raheja CG (2005) Determinants of board size and composition: a theory of corporate boards. J Financ Quant Anal 40(2):283–306
Stiles P (2001) The impact of the board on strategy: an empirical examination. J Manage Stud 38(5):627–650
Weisbach MS (1988) Outside directors and CEO turnover. J Financ Econ 20:431–460
Young GJ, Stedham Y, Beekun RI (2000) Boards of directors and the adoption of a CEO performance evaluation process: agency—and institutional—theory perspectives. J Manage Stud 37(2):277–296
Zahra SA, Pearce JA (1989) Boards of directors and corporate financial performance: a review and integrative model. J Manage 15(2):291–334
Author information
Authors and Affiliations
Corresponding author
Editor information
Editors and Affiliations
Rights and permissions
Copyright information
© 2018 Springer Nature Singapore Pte Ltd.
About this paper
Cite this paper
Lee, C.J., Wang, R., Hsu, S.C., Lee, C.Y. (2018). Board of Director’s Role in Preventing Corporate Misconduct in the Construction Industry. In: Chau, K., Chan, I., Lu, W., Webster, C. (eds) Proceedings of the 21st International Symposium on Advancement of Construction Management and Real Estate. Springer, Singapore. https://doi.org/10.1007/978-981-10-6190-5_33
Download citation
DOI: https://doi.org/10.1007/978-981-10-6190-5_33
Published:
Publisher Name: Springer, Singapore
Print ISBN: 978-981-10-6189-9
Online ISBN: 978-981-10-6190-5
eBook Packages: Business and ManagementBusiness and Management (R0)